The Indian diamond industry plans to reduce bank financing by one-third and prioritize inventory clearance

The current difficulties faced by the global diamond industry are obvious to all, and India, as a midstream country in the industrial chain, has even announced the news of "reducing bank financing by one-third" today.

According to a report released by the Indian Economic Times today, with the coordination of organizations such as GJEPC, the total financing amount of the Indian diamond industry from banks may be reduced from $6 billion to around $4 billion this fiscal year. The drop of up to one-third has quickly attracted attention from both inside and outside the industry.

The previously mentioned "spontaneous cessation of import of rough diamonds" action has already begun, and India hopes to help clear its bare diamond inventory in this way and provide some support for the price of diamonds.

For banks that provide loans to diamond companies, it is reasonable for the industry to lower its financing needs. Unlike the tightening policies triggered by the 2018 Nirav Modi loan fraud scandal, this downgrade can be seen as a "premonitory and logical" behavior.

Kirit Bhansali, Vice Chairman of GJEPC, stated that the China Council for the Promotion of International Trade has informed banks in advance that due to the slowdown in demand in the US and Chinese markets, diamond companies are operating very carefully and trying to avoid generating new inventory.

The next four months are crucial

Note: From our statistical data, the total export of natural diamond bare diamonds from India from January to September this year was 14.05 billion US dollars, a decrease of 24.61% compared to the same period in 2022 and 22.21% compared to the same period in 2021. This is not a very optimistic situation. (As shown in the above figure)

If viewed from a fiscal year perspective (i.e. from April to March of the following year), the total export of natural diamond bare diamonds in the first half of the fiscal year 2023-2024 (April September) was $8.63 billion, a decrease of 29.31% compared to the same period in 2022 and 30.24% compared to the same period in 2021.

The Economic Times believes that current Indian diamond merchants generally consider "clearing inventory" as a key step in improving profitability, building trust, and rebuilding confidence. After all, in the wholesale end of India, the average retention time of large diamonds used to be 2-2.5 months, but now it has been extended to 4.5 months, which is basically the same as small diamonds.

However, there is also a relatively positive news that the demand for jewelry in India is gradually shifting from gold jewelry to diamond products. At the same time, GJEPC Chairman Vipul Shah optimistically stated that the total share of "rising markets" like India on a global scale will reach 20% -30%